US Secretary of State John Kerry on Friday in Baghdad promised another 155 million dollars in humanitarian assistance for Iraqis affected by a militant insurgency in the country.
The new funding brings the total US humanitarian aid for Iraq to more than 778 million dollars since 2014, the State Department said in a statement.
The new aid will help to provide for the urgent needs of millions of vulnerable Iraqis displaced by the conflict inside the country and throughout the region, according to the statement.
Iraq is struggling against the Islamic State radical militia that seized large chunks of the country in a 2014 blitz, displacing millions of Iraqis.
Out of Iraq's population of 33 million, the United Nations estimates that 10 million people across the country are in urgent need of humanitarian assistance, including an estimated 3 million living in the Islamic State-held areas.
Kerry arrived in Baghdad earlier on Friday for talks with senior officials on the progress of the US-led war against Islamic State.
He said that the hardline jihadists were losing ground in Iraq.
"The fact is, in Iraq, Daesh fighters have not been on the offensive in months," Kerry told reporters in Baghdad, using an Arabic acronym for Islamic State.
"They are losing ground, including more than 40 per cent of the territory that they once controlled in Iraq," he added, according to independent Iraqi website Alsumaria News.
Kerry voiced Washington's support for Iraqi Prime Minister Haider al-Abadi, who is locked in a political crisis with rivals accusing him of failing to deliver on promises for political and economic reforms.
In recent months, Iraqi government forces, backed by a US-led air campaign, have recaptured territory from Islamic State.
In December 2015, Iraq regained the western and mostly Sunni city of Ramadi, marking the first major setback for the radical Sunni group in months.
Islamic State still controls areas in Iraq's Sunni heartland in the west and north.